While still trying to fend off European regulators, Google got struck with a $6.8 million fine from Russian antitrust officials. That’s chump change for a company that nets about $75 billion in annual revenue, but it’s troubling — especially considering that the company’s appeal has been rejected by a Russian court, according to Reuters.
The fine, issued early in August, comes months after Russia’s Federal Antimonopoly Service found Google guilty of stifling alternative search engines, such as the Russian-born Yandex, and other services in Android smartphones. The Moscow arbitration court upheld that decision in March, dealing a blow to the Mountain View, California-based company’s power-broker status among phone manufacturers in the region.
With the new decision rejecting Google’s appeal, the search giant may have to pay the fine and rethink the way Android is distributed via manufacturers in Russia — we have reached out to Google for clarification.
The court agreed with the findings of the FAS — that Google abused its dominant position in the Russian mobile industry to advertise its own apps and services at the expense of local competition. In its decision last year, the agency said Google’s compulsory bundling policy — one that forces phone manufacturers to sign an agreement with the company to preinstall its services in exchange for access to its Play Store app market — was illegal under Russian anti-monopoly law.
The FAS said Russia’s competition laws affect all products that “are supplied to the Russian Federation” — including those from foreign companies.
“We have received notice of the fine from FAS and will analyze closely before deciding our next steps,” a Google spokesperson previously told Digital Trends. “In the meantime, we continue to talk to all invested parties to help consumers, device manufacturers, and developers thrive on Android in Russia.”
In counterarguments before the FAS last year, Google emphasized that its Android partners are free to opt for alternative apps instead of the company’s own. But regulators concluded that most manufacturers found the Play Store an irresistible carrot because it touts more than 2 million apps and a billion active users worldwide. That has led most to, for example, adopt Google as the default search engine on their handsets despite the popularity of Yandex (more than 80 percent of Russians report using Yandex for most Internet searches).
Android has generated billions in revenue and profit for the company since 2008, largely from advertisements shown on Android phones and transactions from the Google Play Store. In light of the recent decision, manufacturers may decide to supplant the company’s ad platform and app store with alternatives.
And the implications of the fine extend far beyond Russia. The European Union’s European Commission began a line of inquiry regarding the company’s Android practices last year, and in April accused the company of boosting its own services and apps on Android over other rival services.
And in the U.S., Google may still be facing some trouble from the Federal Trade Commission, though the commission’s investigation on Google’s search dominance is still early in the process. The FTC once considered suing the company over similar practices in 2012, but scrapped those plans after officials failed to reach a consensus.
Google has previously told Digital Trends that “anyone can use Android, with or without Google applications. Hardware manufacturers and carriers can decide how to use Android and consumers have the last word about which apps they want to use on their devices.”
Yandex filed the complaint to the FAS in February 2015, kickstarting the investigation that led to the fine.
“We are satisfied with today’s Moscow Arbitration Tribunal decision,” a Yandex spokesperson told Digital Trends. “This decision confirms the FAS findings of the investigation into Google’s anti-competitive practices on Android.”
Updated on 08-17-2016 by Julian Chokkattu: Added news that Google’s appeal has been rejected by a Russian court.
Article initially published on 03-14-2016 by Kyle Wiggers.